Question 1

The price of a good is

Accepted Answer

A) always equal to the cost of producing the good. 
B) never affected by the number of buyers and sellers. 
C) usually determined in a market. 
D) None of the above. 
A) always equal to the cost of producing the good. 
B) never affected by the number of buyers and sellers. 
C) usually determined in a market. 
D) None of the above. C

Question 2

A microeconomic model CANNOT be used to

Accepted Answer

A) evaluate the impact of a price change on a firm's revenue. 
B) predict the impact on a rise of the minimum wage on unemployment. 
C) evaluate the fairness of the proposal to nationalize health insurance. 
D) evaluate the effect of an increase in stadium size on the price of a sport team's tickets. 
A) evaluate the impact of a price change on a firm's revenue. 
B) predict the impact on a rise of the minimum wage on unemployment. 
C) evaluate the fairness of the proposal to nationalize health insurance. 
D) evaluate the effect of an increase in stadium size on the price of a sport team's tickets. C

Question 3

Trade barriers should be removed to promote the welfare of the country.This is a(n)

Accepted Answer

A) positive statement. 
B) negative statement. 
C) inverse statement. 
D) normative statement. 
A) positive statement. 
B) negative statement. 
C) inverse statement. 
D) normative statement. D

Question 4

One million automobiles have a defect that could cause the car to explode;however,only one of those cars will actually explode.Nobody knows which one car it is.When the car does explode,the victim's family will sue the automaker for $1 million and win.The defect costs $2 per car to repair.What does economics predict about the automaker's decision to repair the defect?

Accepted Answer

Correcting the defect will cos

Question 5

Explain how a market helps determine which goods and services will be produced,how to produce them,and who gets them.

Accepted Answer

A market promotes interaction

Question 6

Microeconomics studies the allocation of

Accepted Answer

A) decision makers. 
B) scarce resources. 
C) models. 
D) unlimited resources. 
A) decision makers. 
B) scarce resources. 
C) models. 
D) unlimited resources.

Question 7

Microeconomic models are used to

Accepted Answer

A) make predictions. 
B) explain real-life phenomena. 
C) evaluate policy alternatives. 
D) All of the above. 
A) make predictions. 
B) explain real-life phenomena. 
C) evaluate policy alternatives. 
D) All of the above.

Question 8

Increase in price of a good will increase consumers' demand.This is a(n)

Accepted Answer

A) positive statement. 
B) true statement. 
C) inverse statement. 
D) normative statement. 
A) positive statement. 
B) true statement. 
C) inverse statement. 
D) normative statement.

Question 9

Economists tend to judge a model based upon

Accepted Answer

A) the reality of its assumptions. 
B) the accuracy of its predictions. 
C) its simplicity. 
D) its complexity. 
A) the reality of its assumptions. 
B) the accuracy of its predictions. 
C) its simplicity. 
D) its complexity.

Question 10

If actual experience supports two competing theories,then both theories are proven to be true.

Accepted Answer

A) True 
 B)False

Question 11

If a model fits reality but doesn't generate testable predictions,it is of little value to economists.

Accepted Answer

A) True 
 B)False

Question 12

In the supply-demand models to analyze the wheat market,we assume that wheat sold by different sellers is largely the same.We make this assumption

Accepted Answer

A) to test the model. 
B) to easily predict the market price. 
C) to simplify the model while keeping important details. 
D) to avoid the complexities in the real world. 
A) to test the model. 
B) to easily predict the market price. 
C) to simplify the model while keeping important details. 
D) to avoid the complexities in the real world.

Question 13

Under most circumstances,the application of taxes on goods will only affect who gets the goods.

Accepted Answer

A) True 
 B)False

Question 14

One model in economics is the permanent income hypothesis,which basically states that a household's expenditures will not react to a change in income unless that change in income is viewed as being permanent.How would you use this model to predict the expenditure patterns over the course of a year of a real estate agent who only sells homes during the months of April through July?

Accepted Answer

The agent will not consume all of her in

Question 15

Which of the following is an example of a normative statement?

Accepted Answer

A) Since this good is bad for you,you should not consume it. 
B) This good has bad health effects. 
C) If you consume this good,you will get sick. 
D) People usually get sick after consuming this good. 
A) Since this good is bad for you,you should not consume it. 
B) This good has bad health effects. 
C) If you consume this good,you will get sick. 
D) People usually get sick after consuming this good.

Question 16

Which of the following is an example of a positive statement?

Accepted Answer

A) Since this good is bad for you,you should not consume it. 
B) If this good is bad for you,you should not consume it. 
C) If you consume this good,you will get sick. 
D) None of the above. 
A) Since this good is bad for you,you should not consume it. 
B) If this good is bad for you,you should not consume it. 
C) If you consume this good,you will get sick. 
D) None of the above.

Question 17

"Government should impose stricter regulations on oil drilling" is an example of a

Accepted Answer

A) normative statement. 
B) positive statement. 
C) negative statement. 
D) normal statement. 
A) normative statement. 
B) positive statement. 
C) negative statement. 
D) normal statement.

Question 18

Every economic model should include money as a variable.This statement is

Accepted Answer

A) true,because every transaction in the economy uses money. 
B) true,because the federal reserve is very important. 
C) false,because some transactions in the economy are transacted without money. 
D) false,because a model can get unnecessarily complex if it includes money. 
A) true,because every transaction in the economy uses money. 
B) true,because the federal reserve is very important. 
C) false,because some transactions in the economy are transacted without money. 
D) false,because a model can get unnecessarily complex if it includes money.

Question 19

Which one of the following is NOT a key trade-off a society faces?

Accepted Answer

A) Who gets the goods and services 
B) Who produces the goods and services 
C) Which goods and services to produce 
D) How to produce 
A) Who gets the goods and services 
B) Who produces the goods and services 
C) Which goods and services to produce 
D) How to produce

Question 20

Consumers choose their cellphone plans according to their needs and package features.This is an example of

Accepted Answer

A) importance of information to consumers' choices. 
B) importance of making personal budget. 
C) maximizing an objective that is subject to a constraint. 
D) minimize the cost of cellphone usage. 
A) importance of information to consumers' choices. 
B) importance of making personal budget. 
C) maximizing an objective that is subject to a constraint. 
D) minimize the cost of cellphone usage.

The price of a good is

A microeconomic model CANNOT be used to

Trade barriers should be removed to promote the welfare of the country.This is a(n)

Explain how a market helps determine which goods and services will be produced,how to produce them,and who gets them.

Microeconomics studies the allocation of

Microeconomic models are used to

Increase in price of a good will increase consumers' demand.This is a(n)

Economists tend to judge a model based upon

If actual experience supports two competing theories,then both theories are proven to be true.

If a model fits reality but doesn't generate testable predictions,it is of little value to economists.

In the supply-demand models to analyze the wheat market,we assume that wheat sold by different sellers is largely the same.We make this assumption

Under most circumstances,the application of taxes on goods will only affect who gets the goods.

Which of the following is an example of a normative statement?

Which of the following is an example of a positive statement?

"Government should impose stricter regulations on oil drilling" is an example of a

Every economic model should include money as a variable.This statement is

Which one of the following is NOT a key trade-off a society faces?

Consumers choose their cellphone plans according to their needs and package features.This is an example of

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 1: Introduction

The price of a good is

A microeconomic model CANNOT be used to

Trade barriers should be removed to promote the welfare of the country.This is a(n)

Explain how a market helps determine which goods and services will be produced,how to produce them,and who gets them.

Microeconomics studies the allocation of

Microeconomic models are used to

Increase in price of a good will increase consumers' demand.This is a(n)

Economists tend to judge a model based upon

If actual experience supports two competing theories,then both theories are proven to be true.

If a model fits reality but doesn't generate testable predictions,it is of little value to economists.

In the supply-demand models to analyze the wheat market,we assume that wheat sold by different sellers is largely the same.We make this assumption

Under most circumstances,the application of taxes on goods will only affect who gets the goods.

Which of the following is an example of a normative statement?

Which of the following is an example of a positive statement?

"Government should impose stricter regulations on oil drilling" is an example of a

Every economic model should include money as a variable.This statement is

Which one of the following is NOT a key trade-off a society faces?

Consumers choose their cellphone plans according to their needs and package features.This is an example of

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters